How the online Apple Store helped Steve Jobs rescue Apple

A store that opened in 1997 and never closed

Apple's first online store opened for business on 10 November 1997, according to Apple Insider, and has remained online ever since. The only interruptions come when Apple deliberately takes it down for hours before announcing a new product, a ritual that has itself become a form of promotion.

The article argues that the store deserves more credit than it usually gets. Steve Jobs had returned to Apple and cut the product range down to a few core machines, and the iMac was still to come. Neither step alone, the report suggests, was enough to save the company.

Why Apple needed its own shop

By the late 1990s, Apple was struggling to get shelf space. Macs were rarely the most profitable sale for a retailer, so staff had little reason to push them, and fewer shops bothered to stock them at all.

Shortly before the online store launched, Apple had agreed a deal with CompUSA to create a store-within-a-store, giving the brand a higher profile but leaving it under another company's control. Apple Insider quotes Steve Jobs, from his later conversations with Walter Isaacson, saying that salesmen only cared about a 50 dollar spiff, and that Apple was in trouble unless it could reach customers in stores directly. A shop on apple.com was owned and run by Apple alone.

The Dell problem

The clearest model in front of Apple was Dell. Dell had skipped resellers almost entirely, selling mainly by phone, and had cut its stock of finished computers to a minimum. Michael Dell said at the time that holding 11 days of inventory instead of a competitor's 80 meant reaching the market 69 days sooner when Intel released a new chip.

Dell built a web store starting in 1995 and launched it in July 1996. By December of that year it was reportedly earning one million dollars per day. Apple Insider notes the irony that Dell's store was built with WebObjects, software tools from Steve Jobs's former firm NeXT, which Apple had since bought.

Michael Dell had also famously dismissed Apple's prospects. In October 1997 he said he would shut the company down and return the money to shareholders. Jobs did not forget the remark.

Coming after Dell

Apple released a video of Jobs launching the online store, though Apple Insider reports that no copy survives online today and an earlier circulating copy was nearly inaudible. What Jobs said is still known. He acknowledged that Dell had pioneered the online store and set the standard for ecommerce, then said Apple was setting a new standard with its own store and build-to-order manufacturing, adding: "We're coming after you, buddy." The remark was aimed squarely at Michael Dell.

Early results and what came later

The new store brought in 12 million dollars of revenue in its first 30 days, which Apple Insider estimates at roughly 25 million dollars in today's money. That averaged about 730,000 dollars per day, around three-quarters of what Dell's store was earning daily after its first six months.

Direct comparison with today is not possible, since Apple no longer breaks out figures in a comparable way and the company has changed beyond recognition. There were no services in 1997, only hardware, and no physical Apple Stores. Jobs only recruited retailer Ron Johnson to plan the retail chain in November 1999, and the first store opened in 2001. Apple Insider suggests the physical stores might never have existed without the online shop's early success, especially as traditional resellers were in decline.

Why it matters

The store helped Apple survive a period when it had few other routes to customers, and it later became central to the company's success. Apple Insider points to Apple's Q4 2019 earnings, the last full quarter before its newer services were running, from which it deduces daily hardware sales of about 570 million dollars, roughly 747 million dollars in today's money. That is 781 times the online store's initial daily revenue.

The report also notes how vital online sales became when physical stores closed during the coronavirus pandemic. Nearly three decades on, the store remains both a sales channel and a promotional stage for new products.